Sorry, but Nancy Pelosi is wrong. We do have a spending problem and the heart of the matter is our inability to control medical costs. Spending on health care now consumes an astonishing 18 percent of our total economic output. Rising Medicare and Medicaid costs are the main drivers of our national debt crisis. Yet health care costs continue to shoot up relentlessly.
It’s not all bad. Americans live longer, healthier lives due to medical innovation. As the population ages, they consume yet more medical care and there’s more that can be done for them. So far, so good.
But our health care system is also plagued by extraordinarily high levels of waste, estimated at 30 percent or $750 billion annually by the Institute of Medicine. Some of it is administration, like the $210 billion spent in processing claims, a number which doesn’t include the enormous amount physicians must spend on claims submission and adjudication.
But even more of the waste is just plain unneeded, ineffective tests and treatments. “Routine” EKGs and blood chemistry tests, back x-rays for uncomplicated back pain and preoperative chest x-rays soak up hundreds of millions of dollars without improving outcomes. Colonoscopies, mammograms and Pap smears are all useful in early diagnosis of cancer but performing them more often than recommended just adds to waste.
This isn’t all harmless either. CT scans cause a statistically significant increase in cancer risk. Colonoscopies rarely — but often enough to be worthy of concern — cause bowel perforations. Unnecessary tests often lead to a cascade of more tests, each with their potential complications.
Much of the least defensible waste is due to “defensive medicine”, the hope of avoiding future liability claims by ordering more tests “to make sure.” It’s impossible to calculate how much malpractice pressure has inflated health care costs because practice standards themselves have changed in response to the litigation threat.
For example, CT scans are routinely used today to evaluate headache patients in ERs, when in the past careful clinical assessment could reliably exclude significant problems. America doesn’t have to lead the world in litigation expense, but politically powerful trial attorneys have been able to stifle most reform so far.
So why is health care plagued with waste while manufacturing and other economic sectors operate efficiently? It’s the way in which health care is bought and sold. Think about it. Where else are purchasing decisions made where neither buyer or seller is much concerned about price and often don’t even know what it is?
It’s even worse than that. Physicians are generally paid more for doing more tests and treatments. Patients don’t value their ability to be cost effective, and other service providers appreciate the referral business. For insured patients, which is most of us, the incentives are to green-light most anything. After all, little or nothing is coming out of their pocket so an insurance “winner” is the one who uses the most resources.
The medical literature abounds with proposed solutions to control health care cost. Electronic medical records, physician payment reforms and managed care (again) have been touted . Increased price transparency and patient education make a lot of sense.
But the key reform would be to assure that patients are responsible for the cost of their own health care decisions. We would all have catastrophic insurance to cover unmanageable expenses but otherwise pay for our care out of a tax-deductible account where we get to keep what’s left.
These Health Savings Accounts have been tried and they work. People take better care of themselves. They appreciate doctors who are cost-efficient and they become more involved in choosing appropriate tests and treatments to achieve the results of value to themselves.
There is one other way. The Obamacare answer to runaway costs is the Independent Payment Advisory Board — 15 unelected bureaucrats who would make one-size-fits-all determinations of who gets what.
That’s our choice. We can have a future of dependence and rationing or we can have freedom to work with our doctor of choice to make better health care decisions. Doing nothing is not an option.
East Valley resident Tom Patterson (firstname.lastname@example.org) is a retired physician and former state senator.